Building on the Mail brand – Q&A with CEO Kevin Beatty

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Building on the Mail brand – Q&A with CEO Kevin Beatty

It’s easy to let cynicism creep into the most upbeat of media minds residing within the intensely competitive newspaper and news media landscape that is London today. Kevin Beatty, CEO of dmg media, publishers of the Daily Mail, Mail on Sunday, MailOnline, Mail Plus, Metro and Elite Daily, will have none of that, thank you.

“You hear a lot of doom and gloom these days, and indeed we all face some challenges, but I think it is an incredibly exciting and fascinating time to be in this business,” said Beatty, who has been with the DMGT Group for 20 years.

In terms of just sheer numbers, he has reason to be brimming with optimism. The Mail media brands he manages as part of the vast Daily Mail and General Trust (DMGT) business carry considerable clout:

MailOnline, often referred to as the most popular newspaper website in the world, reported a monthly average of 220 million unique browsers during the company’s first quarter (till end of December), up 12 percent YoY. And the average number of global daily unique browsers were 13.7 million, up 11 percent on last year. UK revenues were up 17 percent and US revenues were up 66 percent, reflecting the strong growth trajectory there where it has invested heavily in recent years.

A total of more than 1.1 million users have registered for its online membership (rewards) programme, MyMail, launched in late 2014, and on average, about 350-400,000 readers are actively engaging with the loyalty scheme each month.

While most UK newspapers are suffering between 8-10 percent declines in paid circulation per year, the Daily Mail (1,589,471) and Mail on Sunday (1,388,059) is more stable at around 4 percent, second only behind The Sun. And its free daily, Metro, still has a significant circulation (1,348,033).

Despite those impressive figures, dmg media’s print products – like many publishers elsewhere – have suffered their fair share of declines in advertising. Which is why Daily Mail’s steady sales and MailOnline’s continued growth are all the more important for future stability and growth.

While those brands carry sway, they also bear the largest share (40 percent) of DMGT’s overall revenues. DMGT, which operates in more than 40 countries with some 10,000 employees, is made up of five operating businesses:

In its annual report, DMGT reported that 47 percent of its overall revenues are now coming from digital, and that it expects that figure to increase, from its B2B businesses but especially from the success of dmgmedia’s US online activities.

That’s a good place to start with Beatty, who sat down with us for a (rare) wide-ranging interview in mid-February, shortly after The Independent announcement. He will also share what's next for The Mail during a keynote presentation at Digital Media Europe 2016 in Vienna in April.

WAN-IFRA: The Independent closing its print edition… how does that impact the landscape in the UK?

Kevin Beatty: One of the many things that's fascinating about our industry is that these big events come and go and the world moves on. This is not the first such event nor will it be the last. There have been many publishing launches and cessations over the years, which demonstrates the vibrancy of our sector.

I can see why ESI, the owners of the Standard and Independent Media, has taken this action. Circulation of the Independent had fallen to unsustainably low levels with much bigger audiences for the brand online. In its spin-off, the 'I', which is doing relatively well, it had created a publishing model where Johnston Press saw value. No doubt, under its new owner, we will witness some further new initiatives and just to add a little spice Trinity Mirror has recently launched a new daily newspaper, the NewDay.

How do you feel about being mentioned as a possible successor to Martin Morgan as CEO of DMGT PLC?

Surprised – DMGT plc is an incredibly well diversified operation of which dmg media is an important part. It has huge opportunities and I am sure the Chairman and his nominations committee will scour the world in search of the best candidate to take over from Martin Morgan when he retires. I have no doubt there will be a lot of interest for such a well-coveted role.

There has been some mention of internal candidates in the media and one newspaper referred to me as a possible but with an outside chance - so let's leave it at that.

What are some of the metrics or milestones you track to see if you are on the right track of transformation?

There are so many metrics, which like any good business we measure. For me, bearing in mind that the role of our company is to produce high-quality popular content and deliver that to a scaled audience from which we can sustain the business, there are two key metrics – relevance and influence. How big is our audience? Is it growing? Is it a quality audience that works for our commercial partners? Are they investing more of their time and money and engaging more? Are they advocates of what we do?

Our high-quality popular journalism has been the bedrock of this business for 120 years and by these measures it is clearly still working!

Going back to the Independent and print… how would you characterise your print business?

Brilliant! And the reason I use a word like 'brilliant' is that we continue to be so relevant to that segment of our audience who prefer to pick up our high-quality popular journalism in the form of a newspaper. They are prepared to pay for it – the cover price of the Daily Mail has just gone up to 65p Monday to Friday. The Mail on Sunday has just become Britain’s best read Sunday and Metro goes from strength to strength. Furthermore, they continue to be highly engaged with the newspapers, and through MyMail – our online portal for Mail Newspapers’ readers we are learning so much more. Many of our newspaper readers also spend considerable time topping up during the day with the additional content they find on our websites.

In the UK, the sale of newspapers is going down between 8 and 10 percent per annum. The Mail titles are falling by around half of that and Metro’s distribution is rock steady. We still retain real scale in all the key demographics in the UK and with the addition of our digital audiences hold the number one position among news brands. Then there is the ever-growing success of MailOnline across the rest of the world.

MyMail makes sense – and cents?

You mentioned MyMail, what kind of results are you getting from the membership programme?

MyMail is the go-to place for our newspaper customers to personally interact with us and to be rewarded through a loyalty point scheme for buying the paper. In the past in the UK, we knew our customers generically but not specifically because of the method of sales – through a retailer. By using technology, and it's relatively straightforward technology, we now have around 400,000 people a day telling us that they have bought that day's paper. They do that by coming to MyMail where we give them lots of opportunities to earn points; to view additional content, which is primarily commercial, and to encourage further transactions.

So this is the closest you get to paid content?

Well, the content is already paid for when they purchased their newspaper. Then as a reward for doing that and telling us more about themselves, they build up points which they can then exchange for incentives, whether that's money off their groceries or another product or service.

How many have signed up for this?

We have over a million people who have signed up to it of which we see around 400k every day. Obviously not the same 350 to 400,000 every day. Some people do visit four or five days a week, some will be there seven days a week, some three days a week. But it's a great information source for us, to get back to my earlier point, on how to continue to give reasons for people to actually buy the paper more frequently.

Do you see a day on the horizon when you will charge for content online?

We have never been absolutist about this. As a business we continue to be curious, continue to steal ideas from wherever we see good things happening and we never say never in terms of paid-for digital content online.

Do you have figures, or can you comment on what percentage of readers are leaving print and converting to tablet products or paid digital products?

Difficult to directly attribute newspapers sales losses to any one alternative. If you look at the way we try to measure these things, there's around 25 to 30 percent of our newspaper customers also regularly enjoying our online offer through MailOnline.

As a business, we have really grown the audience that engages with Mail and Metro content. I think one of the big things we see at the moment is that our decline is mainly caused by our customers buying the paper less regularly and in-filling with other media – of which a lot of it is our own digital brands. A big focus for us, and perhaps one of the reasons why we are doing so well, is that we concentrate on trying to ensure that those who love their newspaper actually continue to have reasons to buy it as regularly as they previously did.

Where are your key revenue sources, in terms of where print ranks to other parts of the business?

There are three revenue areas. The revenue that comes from people paying for our content – and all of that is people paying for our newspapers. Some of our customers subscribe to the newspaper experience via Mail Plus on their tablets, which is an area where we see further growth potential as we introduce new subscription packages this year.

Then there is advertising in all its forms, and then our commerce business where we sell products and services directly to our customers through our distribution channels. The biggest part of our revenue is still that coming from the cover prices of our newspapers, the second is advertising and the third is commerce.

Dailymail.com in the USAdvertising trends

Let's talk about the outlook for digital advertising expenditure. MailOnline in the US has seen great growth – how do you see that developing now that your audience has gotten much bigger there as well?

We are very pleased with the rate of growth of advertising in the US. It’s not uncommon that advertising spend tends to lag audience growth. When you are relatively new to a market with lots of other players there who have traditionally taken the advertising revenue, there is a big challenge to cut through with the people who make the decisions on where the advertising spend goes. The way that we've chosen to do that with Dailymail.com, as it's called in the US, is to continue to invest in content and grow audience.

We now have a very powerful trade story for media buyers and take-up of the highly effective advertising opportunities in dailymail.com is very encouraging….and Daily Mail TV is yet to launch!

What was behind the lag in advertising revenue this past summer?

Newspaper advertising went very quiet in the UK which was, of course, a concern – and now we are having to find ways of better engaging with the advertising community to see if we can win that back. There are so many opportunities for advertisers to spend their budgets; we're competing in that marketplace. As a sector, newspapers are faced with some negative sentiment and overlay that with the fact that many companies and their media agencies are experimenting with marketing budgets, we have much to do.

In July, you announced a unified sales team, Mail Brands UK, to sell across all your different titles, channels and platforms. … how has this impacted your business so far and why was it done then?

It was all about timing. The fall-off in newspaper advertising last year was the final push. We wanted to achieve two things – deliver our advertising solutions across our whole audience, newspapers as well as digital and to do so efficiently. We decided that it was best to bring our sales operation together under Mail Brands, and to bring to the market a host of very creative omni-channel solutions. That very much includes video and some really innovative and clever bespoke solutions for advertisers who have been with us for a while and that we've also introduced to some new advertisers. It has also meant that we have had to lose some long serving colleagues and create new structures, hire different talent and add news skills.

Talking about advertising, is there anything that you've seen that is working particularly well, or not – is it native, video, programmatic?

Programmatic will keep on growing. One of the things that we're very conscious of is that better data and insights is so necessary to better inform those programmatic decisions that determine what advertising goes where and the value placed on it. So that's a big investment area for us. Most, but not all, advertising at some stage will end up using technology to be automatically delivered, and again, that's something that we're working with others to help facilitate.

But if you look at where Mail Brands is spending a lot of time and investment, it's actually in creating, in concert with our advertisers, those marketing solutions that work best with our very valuable audience across our media brands. And as I said, we've had good success with some of our existing advertisers like Marks and Spencer and some advertisers who are relatively new to us like Iceland [frozen goods].

So that is not a global team?

No, no, it is in-country. Some programmatic is international; some clients like to deal with us internationally, but most of that is in-country. In Australia, we have our sales operation there, in the US we have a sizeable sales operation, and in the UK we have Mail Brands. In the US, Elite Daily and dailymail.com work together to go to market.

We have never really centralised much of our business. We want to keep critical aspects or services as close to the relevant market and end customer as possible. That has been key to our success over a long time.

What can you say about your experience with ad blocking?

We certainly track that. Depending on the demographic, the country and the device we see different levels of ad blocking. But for us ad blocking is still used by a relatively small percentage of our audience.

One of the frustrating things is that we as a company have never allowed the type of intrusive advertising that has created the backlash that has opened the way for ad blocking. This is an industry problem so we will work with whoever we can to reduce/fight the ad blockers from holding our industry to hostage.

Learnings in the US

Coming back to the US, who are your competitors there, especially now with the acquisition of millennial-focused Elite Daily and your continued focus in that market?

Essentially, we are competing with everybody. Elite Daily was a really interesting acquisition for us. It's a content business which creates great content for a particular segment of the American consumer market, i.e. millennials. The people who run Elite Daily have a great empathy with that audience and know how to talk to them – it's a very hot space for advertising, and we are happy to be in it.

In terms of some of the intense competition for ad dollars in the US, what's your USP for brands?

Well, I think that if you look at Dailymail.com and Elite Daily and combine their reach with that millennial audience – a very important audience for advertisers – we have both the scale and the connections, which allows us to compete with the best of them.

So the key is scale, more audience growth, more unique visitors, especially for MailOnline?

Well, the publisher of Mail Online, Martin Clarke, has been very focussed from the early days that, yes, of course we want scale, but we want scale that genuinely values our content, that visits the brand on multiple occasions and spends a lot of time engaged with the content. So just having unique browsers who have visited only as a link to a particular story then bounce off somewhere else without really appreciating the value of what we do and who we are – that's not what we're about.

We've always been about giving our customers the best possible experience in terms of the content that we know they're interested in, that they tell us they value [and] doing it in the Mail style that we have developed over the years.

What are some of the lessons learned since the acquisition of Elite Daily?

I think there are two key learnings. One is that we bought a company in the US, which was at a much earlier stage than any of our previous acquisitions, and we are now working with the founders and the team to fast track the business to its next level. That’s obviously both a challenge and a great opportunity. The other is that we're learning from them how to actually create content that engages with millennials and creating advertising that works best with them.

Where does the Daily Mail TV project stand in the US (Daily Mail entered a 50/50 partnership with Stage 29 Productions to produce a news show with TV personality, author and psychologist Dr. Phil McGraw)?

It's progressing well. As you know, we have a joint venture in place, we've been building up the pilots and we’re talking to the networks. As yet we haven’t announced a specific launch date.

In the summer, the Daily Mail North America, WPP and Snapchat announced a joint venture for the content marketing startup called Truffle Pig… where does that project stand?

This innovative business start-up, which will offer brands unprecedented reach and opportunity through content planning, development and creation as well as amplification across digital media sites and platforms, is steadily growing its client and revenue base.

Daily Mail has invested a lot in video over the years, as have other publishers, many of which are finding it very cost-intensive to keep up with the demand, both editorially and commercially… how would you characterise Daily Mail’s situation in terms of video, also for advertising?

If you actually spend time with Dailymail.com and Mailonline.co.uk, the amount of video available, both editorial and advertising, is phenomenal. It's very much a part of what we do. The publisher and his team commission, curate and procure great video. Where it makes sense we co- create video for our commercial clients. Unlike others we have not rushed into own video production, which as you say is expensive, but it’s certainly an area that’s constantly under consideration.

What are the next steps for Daily Mail plus (tablet product)?

Nearly 30,000 people subscribe to Mail Plus. It is sold as a separate proposition from the newspaper and Mail Online. It is continually being improved and was recently made available on smartphones. In addition, we are experimenting with packaged subscriptions of newspaper plus access to Mail Plus on three different devices, and the early results are encouraging.

Since it is clear that Daily Mail is today a global publisher, are there more plans for global markets?

With the success of MailOnline.com, we absolutely are a global business. We have significant audiences in many parts of the world, and we have a business development director who is focussed very much on developing these key markets with other partners, or as is the case now in Australia – on our own.

What role is your e-commerce business playing and how is that performing?

It's doing pretty well. We invest quite heavily in our newspapers, and if, as we have just discussed, there is a drop in paid-for advertising, we actually use some of that space to talk directly to them about products and services that we work together with our commercial partners to create. They still want to buy these products and services that appeal to them and have the spending power to do so. So, for example, some of our branded travel advertising, like Mail Travel, is going really well. We are now selling general merchandise, and we’re seeing good growth here, too. Overall, it's a significant profit contribution for our business.